The rate of inflation across the UK was steady in January from a month earlier, further suggesting that the post-Brexit hit to living standards is easing. The Office for National Statistics on Tuesday said that consumer price inflation was 3 per cent in January, the same level as in December and down from 3.1 per cent in November. December’s fall marked the first in the rate since June. Core inflation – which strips out volatile fuel and food costs – was 2.5 per cent last month, unchanged from the previous month. Inflation leaped in the aftermath of the UK’s June 2016 vote to leave the EU. The prospect of Brexit sent the pound falling sharply against a host of other global currencies, which translated into higher import costs forcing a rise in the price of goods. (Independent)

Wales’ fishing industry risks being “left behind” in Brexit talks due to its unique needs, a report has warned. While the priority elsewhere in the UK is greater control over seas, the Welsh fleet needed easy access to EU markets, a think-tank said. Most Welsh boats specialise in shellfish, with 90% of their catch currently exported to the EU. The Welsh Government said it wanted to see the industry get “its fair share of fishing opportunities in the future”. The Welsh Fishermen’s Association told BBC Wales that ministers needed to be planning a potential system of subsidies if fish exports were hit by tariffs and delays after Brexit. (BBC)

The European Commission could be preparing to pay the cost of EU citizens’ applications to remain living in the UK after Brexit, according to reports. The Guardian newspaper says Commission president Jean-Claude Juncker has discussed using the EU budget to fund the £72 application fee for “settled status” in Britain after the UK leaves. The British Government has insisted on charging EU citizens living in the country if they want to stay, though it says they will be expected to pay “no more than the cost of a passport” for applications. (Independent)

Boris Johnson, Britain’s foreign secretary, on Tuesday faced a backlash as the prime minister and chancellor quashed his heavily publicised demand that the British government spend a “Brexit dividend” of £5bn a year on the National Health Service. Conservative MPs accused Mr Johnson of making “a transparent leadership bid” while Amber Rudd, the home secretary, denounced his decision to leak the NHS proposal to the press, saying she was not sure she could trust him any more. (Financial Times)

Jeremy Hunt has admitted that EU cancer drugs may not be available to British patients after Brexit, describing the risk as “uniquely damaging”. The flow of some medicines would be cut off if the withdrawal negotiations break down, the Health Secretary acknowledged – echoing fears raised by the pharmaceutical industry. Drug giants have told of “significant disruption to the supply chain for medicines” and that customs delays would damage “time and temperature sensitive” materials, without a Brexit deal. (Independent)

Emmanuel Macron, the French president, became the first EU leader to say last week that the bloc might consider “a special way” for the UK in trade talks. Although he said Britain could not “cherry-pick the single market” and that full market access was impossible unless Britain played by all the EU’s rules, he said a compromise might be possible “between this full access and a trade agreement”. (Financial Times)

The British government may have breached a major “environmental democracy” law by failing to consult the public when drawing up Brexit legislation. A UN-backed committee has confirmed it is considering a complaint from Friends of the Earth that the government’s EU withdrawal bill breached the Aarhus convention, which requires public consultation on any new environmental law. (The Guardian)

David Davis has privately suggested that EU preparations for a ‘no deal’ Brexit are “damaging” UK interests and spooking British businesses into moving abroad. A leaked letter penned by the Secretary of State for Exiting the EU shows he has consulted government lawyers about European Commission “measures” which he believes could breach UK rights as a member state and put Britain at a disadvantage. The warning comes despite the British government implicitly threatening a ‘no deal’ scenario itself to extract concessions from Brussels, with Theresa May having said that “no deal is better than a bad deal”. (The Independent)

Promised changes to the UK government’s EU Withdrawal Bill that would reflect concerns over its impact on devolution will be delayed, it has emerged. Scottish Secretary David Mundell told MPs last month that the amendments would happen during next week’s report stage in the House of Commons. However, UK government sources say that the changes will now happen when the bill reaches the House of Lords. (BBC)

The government has come under pressure to reveal the impact on more than 130,000 UK firms of rules due to take effect after Brexit that will force them to pay VAT upfront for the first time on all goods imported from the European Union. Nicky Morgan, the Tory chair of the influential Treasury select committee, has demanded to know what contingency plans were being made to avoid the extra cost of the rule change hitting UK firms. (The Guardian)

EU countries have toughened their stance on Brexit, making clear that talks on a future EU-UK relationship will not begin until March and insisting Britain will stay fully covered by EU rules during a transition — while losing its voice within regulatory agencies — after it leaves the bloc in 2019. Senior national officials have changed draft guidelines on the next phase of talks so they no longer suggest that “preliminary and preparatory” discussions on trade can begin early next year. Theresa May’s government has promised an ambitious and far-reaching trade deal as the final goal of the Brexit talks, although the EU says a formal accord will have to wait until the UK leaves the bloc and that only a more general “political declaration” will be possible beforehand. (Financial Times)

Conservative MPs believe they have the numbers to defeat Theresa May’s government on Wednesday and secure a “meaningful vote” on the final Brexit deal, in a move that would represent the first major rebellion over the EU withdrawal bill. Several politicians told the Guardian they were ready to swing behind the demands of Dominic Grieve in a critical vote on Wednesday evening, unless ministers take last-minute steps to amend the legislation themselves. (The Guardian)

Donald Tusk urged EU leaders to show unity as they try to negotiate what the future relationship will look like and to set up transitional arrangements. The EU is set to agree this week that enough progress has been made so far to move on from the first phase of talks. The UK has been told not to “backtrack” on last week’s divorce deal. The comment from EU chief negotiator Michel Barnier came after UK Brexit Secretary David Davis suggested the divorce agreement unveiled by Theresa May amounted to a “statement of intent” rather than a binding agreement. Mr Davis – the UK’s Brexit secretary – said he was quoted out of context. But European Parliament negotiator Guy Verhofstadt said the “unacceptable remarks” would harm “good faith” in the process. (BBC)

MEPs have called on Theresa May to restore trust by rebuking David Davis over “unacceptable” comments that hardened EU demands in Brexit negotiations. In a highly unusual step, the European parliament will name the Brexit secretary tomorrow as a threat to continuing negotiations. It illustrates the depth of anger at his comment on Sunday that the phase one withdrawal agreement was a “statement of intent”. A resolution to be voted on tomorrow, tabled by all the parliament’s main political groups, says: “Comments like those made by David Davis calling the outcome of phase one of the negotiations a mere ‘statement of intent’ risk to undermine the good faith that has been built during the negotiations. (The Times)